The courier, express, and postal industry is the largest segment of the transportation marketplace worldwide. This blog will provide a personal perspective on the challenges faced by firms in the industry as they serve an increasingly competitive market.

Wednesday, June 22, 2011

In a tweet, Representative Dennis Ross hinted that the bill that Representative Darrell Issa and he will introduce tomorrow will not contain any change to the payment schedules for retiree obligations that are now contained in all other postal reform bills.

#USPS, this is why you prefund retiree benefits. http://t.co/wm1cnvI | "no one else does..." and this is where they are now.

If there are no changes in the payment schedules to reflect overpayment of either FERS or retiree healthcare benefits then the Issa/Ross bill will need to find quick reductions in Postal Service costs elsewhere. There are few options but all will likely affect both compensation to postal employees and service to postal customers.

Representative Issa and Ross have given some hint to these changes in the hearings that they have held and in particular the titles of the hearings. These hints have indicated that the bill likely include the following:

Expedited reduction in service from 6-days per week to 5-days per week;

Expedited public review process for the consolidation or closure of processing facilities;

Expedited public review process for the closure of post offices and changes in the law to allow closure of post offices solely for operating at a deficit;

Reductions in Postal Service compensation at least as great as proposed by Senator John McCain in amendments 251 and 252 to Senate Bill 493, the Small Business Reauthorization Bill. Cuts will occur in:

Executive pay

Postal Service share of health care and life insurance benefits

Reduction in retiree benefits for postal employees including the possible elimination of Postal contributions to FERS and the benefit that these contributions provide. (A similar proposal was made for all government employees in the Senate.)

Postal Service's ability to manage labor costs either through the labor negotiation process or in defining positions of employees currently represented by employee associations.

While these provisions will save the Postal Service money, it is unlikely that they will reduce Postal Service costs sufficiently and sufficiently quick to eliminatethe Postal Service's deficits and allow it to continue to make the retiree healthcare payments. To do that, Representatives Ross and Issa may need to include a provision in their bill to institute a reduction in force (RIF) of around 10% of Postal Service employees to reduce payroll quickly to match income and possibly a provisions to reduce Postal salaries and/or benefits beyond those proposed by Senator McCain and others and that these cuts would include cuts in compensation to both employees that are and are not covered by labor agreements.

A reduction of 10% of the Postal Service Workforce reflects the workforce cuts that Representative Issa, Ross and Chafitz introduced in HR 2114. While that bill would reduce the the Federal workforce over 3-4 years, to get the cost savings required, the Postal Service would need to reduce its workforce almost immediately by 10% to get the cost savings needed to reduce costs to break-even levels. It is unclear how far or how quickly cuts in salaries or benefits could be implemented to employees who are and are not covered by labor agreements.

We need to reduce congress by at least 10% as well as cut their pay and reduce their health care benefits and increase their contribution to their health care costs. Whats good for one group of government employees should be good for all.....

It's not very wise to eliminate the middle class by not paying living wages. Who do you think really props up the economy? I think it's way past time for public funding of campaigns so we can get these rich elitists out of Congress!!!!

Hey Tom, same old democrate b/s, you left out Bush did it and anything about Nixon, how could you come up with these thoughts based on this article? How about a Postal fix from you, list five things to do.

I'm sick and tired of certain congress members who think they know how to fix the p.o. they're the ones who messed it up. They should just leave it alone ,it would probably do better without their help!

These two Congressman have no idea what the issue is... they have even less an idea of the US Constitution which brings into exsistence the Post Office Department... Univeral Coverage is not sustainable for a private enterprize that's why the post office is here.... how about we cut all Congressional Staff to ZERO and let the damn politicos actually work for the money we pay them?

Ross wants the Postal Service to fail. He has no intentions of fixing the REAL problems, ie:by reducing or eliminating the Postal Services' contribution to future retirees healthcare. If he/they set us up to fail, then it gives them an excuse to privatize.Then suddenly, there would be no need to prefund, and we the employees would be fired and rehired at half the pay and no benefits, while the "private postal service would again be making billions a year AND, the balance of what we the employees would be making, they would also be pocketing. That is what privatization does, the corporation takes money that doesn't belong to them and either makes a profit off of it or just pockets it.

The Postal Service is NOT tax-payer funded: all revenue comes from sales of goods and services, so I don't see how Ross and Issa think they have any say in what the Postal Service does. The only thing on the Federal budget pertaining to the Postal Service is payments for those goods and services. The Postal Service is NOT asking for a bailout: just to either be relieved of the 2006 mandate to pre-fund retiree health benefits and/or be able cover the cost of the pre-funding mandate using the billions of dollars they have overpaid into 2 other retiree funds. The mandate requires the USPS to pre-fund most of the retiree health benefits payable over the next 75 years WITHIN A DECADE – something no other public agency or private firm does. The resulting annual payments run $5.5 billion a year. (Were it not for these prefunding payments, the Postal Service would have realized a PROFIT over the last few years, in spite of mail being diverted to the internet!) The U.S. government is treating the Postal Service as a 'cash cow' - that's what's going on here. That and some people in Congress are working to personally benefit financially if the Postal Service is privatized, so they have a vested interest in seeing it fail.

HR2114 was modeled on the death of my spouse as a letter carrier that representative learned about and then formed the bill and brought it to senator issa to put out on the floor of the house, it came on the floor on june 3, but was sent back to the govt oversight , the bill wanted to not only reduce all federal employees by 10 percent, but also to make it law , a legal law , to only replace 3 retired workers with one, legally, it was based on what happened to my spouse who became the only carrier after having 2 retirements and one injured all who left his office, and making him work more then one route at physcial risk, he died after enduring a year of this, and representative ross thought that was brillant, that he would put it in a bill and make it legal.

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Blog Author

Alan Robinson is the President of the Direct Communications Group and an associate of Analytic Business Services (AnaBus). He has over twenty years experience helping firms and government officials deal with the regulatory, policy, marketing, and management issues associated with changes in competition within transportation, parcel delivery and postal markets.
He can be reached at alan.robinson@directcomgroup.com